ratchorg
Registered: Dec 2008
Posts: 42 |
11-06-09 08:09 PM
looks promising for PEET:
Summary:
Peet's Coffee: Initiation details (38.59 +1.99) : As mentioned earlier Janney Mntgmy Scott initiated PEET with a Buy and a $62 fair value estimate. The firm says with the pending acquisition of Diedrich Coffee (DDRX), PEET now has access to the fast-growing single cup segment of the specialty coffee category and is participating in this trend with the market leader, Keurig.
Firm says prior to the acquisition, they forecast PEET has a three-year sales and EPS CAGR of 9% and 20%, respectively. With Diedrich, they forecast a three-year sales and EPS CAGR of 19% and 47%, respectively. At $37/sh, PEET is trading at 35.0x their 2009 EPS estimate of $1.06.
While 2010 EPS will see the dilutive impact from the acquisition primarily in the form of non-cash goodwill amortization (~$0.50/sh), they expect EPS to more than double from the estimated 2009 level of $1.06 to $2.49 (ex-goodwill amortization) in 2011. Their current DCF-derived fair value of PEET excluding Diedrich is $40/share.
Applying a forward P/E range of 25.0x to 35.0x (31.7x historical average) to their 2011 cash EPS estimate (including Diedrich) of $2.49 yields a twelve-month fair value target range of $62/sh to $87/share
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